Two days after the Government Accountability Office’s one-time audit examining Federal Reserve activities during the economic downturn was published, Sen. Bernie Sanders (I-Vt.) called its lending decisions, “socialism for the rich and rugged.”

As part of last year’s Frank-Dodd financial reform legislation, the GAO was commissioned[2] [PDF] to review the emergency actions taken by the Federal Reserve Board from December 1, 2007, through July 21, 2010.

The report concluded $16 trillion in emergency funds were issued to financial institutions worldwide, and that some $660 million were paid to a handful of banks to administer the emergency loans. Most of the contracts associated with the latter sum were not issued through a bid, primarily due to “exigent circumstances,” the report explains.

While the contracts were consistent with acquisition policies governing the Federal Reserve Bank of New York, the most active of the Federal Banks during the financial crisis, the authors of the report write, “policies could be improved by providing additional guidance on the use of competition exceptions, such as seeking as much competition as practicable and limiting the duration of noncompetitive contracts to the exigency period.”

The findings, in typical GAO-style, are described using a very clinical parlance, but they drew the ire of the senator.

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. “No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed,” he said.

A spokesperson for the senator, Michael Briggs, told The American Independent that Sanders’ “position is that the information should have been public and that the Fed needed greater oversight.”

Asked what would be different had the Federal Reserve been more forthright, Briggs said: “Greater transparency often results in outcomes more favorable to the public at large.”